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Covad Launches a Bundle

Covad Communications Group Inc. has bet on the power of the bundle with its first-ever combined voice and data service, unveiled in San Francisco last week.

The competitive digital subscriber line provider has aimed its integrated TeleXchange service to small and midsized businesses. It claims it can offer up to 40 percent savings, compared with its Baby Bell competitors.

Small businesses are a perfect target for the combined voice and DSL product, according to Covad group product manager for voice services Todd Kiehn.

"The market need we are trying to address is a growing need for businesses to simplify their lives and save some money on telecommunications costs, and one way that I think businesses intuitively lead to that is by reducing the number of suppliers of services," Kiehn said. "So when we asked small business customers in our target market, 'Would you be interested in getting local, long- distance voice and Internet access from the same company?' everybody raises their hand and says, 'Sure, sign me up.' "

For the most part, Covad had offered Internet access. Only recently did it develop the voice-over-DSL technology necessary to field a combined voice and data package using a single line. Data and voice traffic are funneled side by side, through an integrated access device at the customer's office.

The return path data and voice traffic are then routed to Covad's central office DSL controllers. From there, they separate: data travels through Covad's asynchronous transfer mode (ATM) network to the Internet, while voice traffic is funneled through a network provided by partner Focal Communications Corp., winding its way to the public switched telephone network.

The access device adjusts the throughput to give priority to voice traffic, ratcheting down the DSL throughput when such activity is high.

"That was what the last push to get this on, was the realization that the technology works — there has got to be a way to make this work operationally and to sell it in the market and make money," Kiehn said.

For $200, TeleXchange offers a four-line voice service with unlimited local calling, 1,500 minutes of long-distance access and six standard calling features, including caller ID and call waiting. Internet access is priced at $179 for a 384 kilobits per second symmetric connection, or at $369 for a 1.5 megabits per second symmetric service.

The average small business pays $250 to $300 for telephone service from SBC Communications Inc., Kiehn said.

"That's targeting customers that have bandwidth needs that can be met by DSL," he noted. "The second piece of it is — the market opportunity of it is — is customers who have voice needs and have the usage levels and number of lines in their locations that can be met by a voice-over-DSL solution."

Through 2003, Covad will expand the voice-and-data service to about 10 to 15 major markets. It is also looking to add an asymmetric DSL service with voice, similar to its existing TeleSOHO data offering, aimed at the home office user who only needs a fax and an office line.

A T-1 based version that can handle larger accounts also is on the drawing board, Kiehn said.